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KESDMEnergy and Mineral Resources for People’s Welfare 1
GOVERNMENT POLICIES TO BOOST GEOTHERMAL DEVELOPMENT IN INDONESIA
MINISTRY OF ENERGY AND MINERAL RESOURCES OF REPUBLIC OF INDONESIADIRECTORATE GENERAL OF NEW. RENEWABLE ENERGY. AND CONSERVATION ENERGY
Jakarta. June 5th 2014
Presented on:Indonesia International Geothermal Conference and Exhibition (IIGCE)
By :Rida Mulyana
Director General of New. Renewable Energy and Energy Conservation
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CONTENTS
I. BACKGROUND
3
II. GEOTHERMAL POTENTIAL
5
III.REGULATION AND POLICY
7
IV.MAIN CONSTRAINT ON GEOTHERMAL
DEVELOPMENT
AND THEIR MEASURES 10
KESDMEnergy and Mineral Resources for People’s Welfare 4
1. Indonesia’s primary energy supply is mainly based on fossil fuels, but the reserves decreased significantly.
2. Located in the Ring of Fire, Indonesia is blessed with an enormous geothermal potential, more than 28 GWe and the locations are spread in almost all regions. Up to 2014, total installed capacity of geothermal energy is only 1,341 MW (< 5%).
3. The Government intends to accelerate and speed up the development of geothermal energy and achieve the targets of 9,500 MW in 2025 as stated in Presidential Decree No. 5/2006 on National Energy Policy;
4. Up to 2014, The Government has determined 58 GWAs. Nineteen of the GWAs were established before the issuance of Law No. 27/2003 while 39 of them were established afterwards.
5. Geothermal Energy cannot be exported which make it suitable to meet domestic energy needs, reducing the dependence of foreign fuel and provide added value in energy diversification;
6. Geothermal energy is clean, environmentally friendly and sustainable;
7. The Government have been issued crash program to accelerate electricity generation. Geothermal power plant is expected to contribute 4,965 MW;
8. To boost geothermal development and provide certainty of geothermal energy price, goverment re-structure the regulation related to the purchase of electricity from geothermal power plant.
GEOTHERMAL ROLES TO MEET NATIONAL ELECTRICITY DEMAND
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PLTP SIBAYAK: 12 MW
PLTP GUNUNG SALAK: 377 MWPLTP WAYANG WINDU: 227 MW
PLTP KAMOJANG: 200 MW
PLTP DARAJAT: 270 MW PLTP DIENG: 60 MW
PLTP LAHENDONG: 80 MW
Note:
Production Phase
Ready to Developed
Detailed Survey
Preliminary Survey
Sources : Geological Agency. MEMR (2013)
PLTP ULUBELU: 110MW
PLTP ULUMBU: 5 MW
PLTP MATALOKO: 2.5 MW
GEOTHERMAL DISTRIBUTION MAP
RESOURCES(MWe)
RESERVE(MWe)
INSTALLEDCAPACITY
Speculative Hypothesis Possible Probable Proven
7.454 4.931 13.315 823 2.288
12.385 16.426 1.341
28.811
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I. Law No. 27/2003 on Geothermal
II. Law No. 30/2007 on EnergyArtc. 20 (4) : Government and regional government in accordance with their authority obliged to increase the supply of new and renewable energy.
III. Law No. 30/2009 on ElectricityArtc. 6 : The utilization of primary energy sources for national electricity need should prioritize the sources of new and renewable energy.
IV. Government Regulation No. 59/2007 on Geothermal Business Activities, as amanded in GR No. 70/2010
V. Presidential Regulation No. 04/2010 on Assignment to PT. PLN (Persero) to Accelerate The Development of Power Plant from Renewable Energy, Coal and Gas
VI. MEMR Regulation No. 11/2008 on The Procedure for Determination GWA
VII. MEMR Regulation No. 02/2009 on The Guidelines for Geothermal Preliminary Survey Assignment
VIII. MEMR Regulation No. 11/2009 on The Guidelines for Implementation of Geothermal Business
IX. MEMR Regulation No. 22/2012 on Assignment to PT PLN (Persero) to Purchase Electricity from Geothermal Power Plant and Geothermal Power Purchase Benchmark Price by PT PLN (Persero)
X. Regulation related to Financial Support and Guarantee:• Government Regulation No. 62/2008 jo No. 1/2007 provides Income Tax Facilities For Investment• MoF Regulation No. 139/PMK.011/2011 which Guarantee The Feasibility Of PT PLN (Persero) To Develop Power Plant Through Public
Private Partnership Mechanism• MoF Regulation No.03/PMK.011/2012 provides Geothermal Fund For Exploration Activities In Order To Mitigate Upstream Risk• MoF Regulation No. 177/PMK.011/2007 regulates The Exemption Duties On Imported Goods• PMK No. 22/PMK.011/2011 states that Government Borne Value Added Tax On The Imported Goods For The Upstream Activities
GEOTHERMAL REGULATIONS
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GOVERNMENT POLICIES FOR GEOTHERMAL DEVELOPMENT
Improving and Harmonizing Regulations and Policies
Crash Program II on Electricity Generation
Provide Fiscal Incentive, Financing Support, and Guarantee
Preliminary Survey Assignment to Third Party which Provide “first
right refusal“
Memorandum Understanding between Energy and Mineral
Resources Minister and Forestry Minister
Control-Mechanism by UKP4
Preparing The Second Amendment of PP No. 59/2007 on Geothermal Business Activities
Revise Law No. 27/2003 on Geothermal
Drafting The Revision of MEMR Regulation No.11/2009 on Guidelines of Geothermal Activities and MEMR Regulation No.22/2012 on Electricity Price from Geothermal Energy
Geothermal is expected to contribute 4,965 MW
POLICIES
For the projects that enrolled in Crash Program II
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III. MAIN CONSTRAINT ON GEOTHERMALDEVELOPMENT AND THEIR MEASURES
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Overlapping Area- Most of geothermal potential are located in the forestry. Among 299 existing locations, around 6,157 MW
(21.5%) are located in the conservation forest and around 6,391 MW (22.33%) are located in protected forests.
- Solution : Revise The Law 27/2003 on Geothermal It is expected at the Plenary Session of Parliament, 24 June 2014. The Revision of Geothermal Law
could be approved.
- In addition, Ministry Of Energy And Mineral Resources is currently coordinating with the Ministry Of Forestry on issues related to forestry for geothermal activities.
Energy Price- Pricing policies which previously set by the government does not provide a significant impact on
geothermal development. The inability of the policies to encourage the use of geothermal is considered because they are not taking into account some crucial aspects.
- Solution : Government is preparing a new tariff model to boost geothermal development Ministerial regulations which regulates new geothermal prices has been signed by the Minister of
Energy and Mineral Resources, and is currently waiting to be promulgated by the Ministry of Justice and
Human Rights.
MAIN CONSTRAINT AND SOLUTIONS
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The terms of "Mining" in geothermal business will be removed in order not to have conflict with the Law of Forestry;
Geothermal activities can be conducted in protected, production, and conservation forest areas;
Regulate the utilization of geothermal energy for direct use and indirect use (electricity);
IUP’s holders are obligated to offer 10% of Participating Interest to State-owned enterprises (BUMN) or local government-owned enterprises (BUMD) before exploitation stage taken place.
PRINCIPAL SUBSTANCES OF THE REVISION
ON GEOTHERMAL LAW
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1. The government is currently developing a comprehensive pricing structure in order to provide legal certainty and overcome constraints which have caused many geothermal projects been delayed.
2. The government set the ceiling price for electricity purchase by PT PLN (Persero) based on Commercial Operation Date (COD) and divide into 3 regions.
3. The ceiling price is the basic price at the time of Commercial Operation Date (COD), exclude escalation and construction of transmission lines.
4. The Escalation in the PPA will take into effect on the Commercial Operation Date (COD) of First Unit.
5. Transmissions lines are undertaken by PT PLN (Persero).
6. The selling price of electricity as the result of GWA tender which refered to ceiling price and written in the PPA is non-negotiable price, valid for 30 (thirty) years from the Commercial Operation Date (COD) of unit I.
NEW TARIFF FOR GEOTHERMAL ENERGY
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Notes: Distribution of Regions:
Region I : Sumatera, Jawa and Bali; Region II : Sulawesi, West Nusa Tenggara, East Nusa Tenggara, Halmahera, Maluku, Irian Jaya and Kalimantan; Region III : Remote Areas within Region I or Region II in which most electrical power are generated from fired-fuels
power plants
CP is applied at the time of COD, exclude escalation and construction of transmission lines Transmission lines are undertaken by PT PLN (Persero)
G W A(Next Tender)
Assignment to Purchase Electricity Based on GWA
Tendering Price
Tendering Price Result (≤ CP)
Signing PPA* No later than 6 months from the date of Assignment
The PPA has not signed within 6 months due to IUP’s Holder subject to administrative penalties
Tendering Process
Ceiling Price(Consist of 3 Regions Price based
on COD)
IUP
The PPA has not signed within a year due to IUP’s Holder
assignment letter will declared void by the Law
GEOTHERMAL POWER PURCHASE MECHANISM (1/2)
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IUP’s Holder
The Signing of PPA/SPA no later than 12 months
after the proposal is received
Capacity Development Extension of PPA
Concession, Permit, and
Contract Holders (Existing
GWA) Designation of an Independent Party when the
PPA is not signed
Agreed
Decline
Minister Agreemen
t
Approval of Independen
t PartyAgreed
Minister Agreemen
t
Power Plant Cap. Dvlpmt
Extension of PPA Price Adjustment* Based on Both Parties Agreement
Development of steam cap.
Extension of PPA Steam Price
Adjustment* Based on Both Parties Agreement
GEOTHERMAL POWER PURCHASE MECHANISM (2/2)
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• PPA must be signed before 31 December 2014 ;
• Price adjustment after exploration and feasibility study;
• If PPA not signed before on 31 December 2014, can’t submit a price adjustment.
• PPA must be signed before 31 October 2014 or return IUP (re-tender)
• Price adjustment after exploration and feasibility study;
• If PPA not signed before on 31 October 2014, can’t submit a price adjustment.
• PPA must be signed before 31 August 2014 or return IUP (re-tender)
• Price adjustment after exploration and feasibility study;
• If PPA not signed before on 31 August 2014, can’t submit a price adjustment.
• PPA must be signed before 30 September 2014 or return IUP (re-tender)
• Price adjustment after exploration and feasibility study;
• If PPA not signed before on 30 September 2014, can’t submit a price adjustment
• Price adjustment after exploration and feasibility study;
• If exploration and feasibility study haven’t been finished and COD target’s hasn’t reached , IUP’s holder given punishment base on PPA
TRANSITIONAL PROVISIONS
Criteria 1Tender winner which hasn’t been obtained IUP
GWA: Seulawah Agam & Gunung Ciremai
Criteria 2IUP’s holder which has hasn’t been assignment and hasn’t been signed the PPA
GWA: Hu’u Daha & Suoh Sekincau
Criteria 3IUP’s holder which has been assignment and hasn’t been signed the PPA
GWA:Telaga Ngebel, Batu Raden, Guci, Gunung Endut, Gunung Tampomas, Cisolok Sukarame, Tangkuban Perahu.
Criteria 4IUP’s holder which has been assignment for negotiation and hasn’t been signed the PPA
GWA:Jaboi, Jailolo and Sokoria.
Criteria 5IUP’s holder which has been assignment and has been signed the PPA
GWA:Muaralaboh, Rantau Dedap and Rajabasa
NegotiationTender IUP Assignment PPA Explorati
on FS
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CEILING PRICE FROM GEOTHERMAL POWERPLANTS BY PT PERUSAHAAN LISTRIK NEGARA (PERSERO)
COD Years
Ceiling Price (cent USD/kWh)
Region I Region II Region III
2015 11.8 17.0 25.4
2016 12.2 17.6 25.8
2017 12.6 18.2 26.2
2018 13.0 18.8 26.6
2019 13.4 19.4 27.0
2020 13.8 20.0 27.4
2021 14.2 20.6 27.8
2022 14.6 21.3 28.3
2023 15.0 21.9 28.7
2024 15.5 22.6 29.2
2025 15.9 23.3 29.6
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GEOTHERMAL. ENERGY SOLUTIONFOR BETTER FUTURE
www.ebtke.esdm.go.id
Jalan Pegangsaan Timur No. 1A Cikini. Jakarta Pusat 10320; Telp/Faks : 021-31924540
MINISTRY OF ENERGY AND MINERAL RESOURCES
DIRECTORATE GENERAL OF NEW. RENEWABLE ENERGY. AND ENERGY CONSERVATION
Thank You
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2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20250
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1,341 1,406 1,720
2,273
3,487
4,927
5,817 6,081
6,420
7,110 7,140 7,215
DEVELOPMENT OF GEOTHERMAL POWER PLANT UP TO 2025
Installed Capacity (MW)
II. DEVELOPMENT OF GEOTHERMAL POWER PLANT(2014 – 2025)
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16%
18.7 %
16.7%
48.4%
Distribution of Geothermal Potential in
Forestry
Conservation Forest
Protected Forest
Production Forest
Other Utilized Areas
21.5% *)
22.3%
13.6%
42.5%
Distribution of Geothermal Potential in Forestry
Conservation Forest
Protected Forest
Production Forest
Other Utilized Areas
*) Geothermal Potential in Conservation Forest is estimated around 6.157 MW
Geothermal Potential Location : 299
Geothermal Potential : 28.6 GW
PERCENTAGE OF GEOTHERMAL POTENTIAL IN FORESTRY